Inheritance for my Children

Invest987

dont_look_now said:

Do consider very seriously whether keeping this property, rather than selling it and investing the proceeds in another way, is the best way to look after this capital for your children.

One way of looking at it is: if your children had been left £550k in cash, would you have used £400k of it to buy this specific property (or even a similar one)?

Note that if one of the children wants to take out the capital at some stage, and the other doesn't, you'd probably have to sell the whole property then.

My uncle was 96, his property would need too much capital to make it rentable. Once proceed are collected then I will have to ask everyone what they think in investing in another rentable property or invest safely for a steady income. I have had amazing advice on that already. 

Invest987

Malthusian said:

As Xylophone says, if it's not a discretionary trust the money is theirs, both will have access at 18 (16 in Scotland) and they need to know about it to avoid tax / benefit fraud if no other reason.

The house certainly needs to be sold as soon as possible as there is no scenario in which it is going to be a prudent investment for the trusts or trust. All sorts of issues including lack of diversification and lack of liquidity for when one wants to withdraw the money.

You need a conversation with both about when / how they are going to spend it to ensure it is sensibly invested. If they plan to spend most or all of it when they turn 18 it will need to be in cash, if they are thinking longer term then so can you as Trustee. (Assuming you are Trustee for the money.)

I am listening with interest about telling the children. Both are already very money aware, earning and contributing tiny amounts for bills, treats and savings. I am the trustee. Its not that I dont trust them in decision making, I guess I find it hard even in my life and I am 52 not relying on anyone elses money. As amazing as it is I still see it as my Uncles whole lifes money and I need as a parent to see that respected. Its intriguing to see a lot of people would tell a 15 year old. I am certainly learning not to be blinkered about it. Thank you. 

Invest987

mark55man said:

good luck and you seem to be doing things for the right reasons.

I would agree with eco-miser that it is a really hard time for young adults at the moment ( I have 4) and I think they should know about it at least - even if they agree with you to maybe delay gratification


For example - if they were at Uni and had to struggle by possibly even working to get some extra cash then I would expect them to be a tad miffed to find out afterwards.  In those Uni years and early 20s - having a but more disposable can really allow opportunities to be taken that won;t come round again.

I think you have to trust your parenting here, in terms of releasing the cash to them.  In terms of the investment, there are plenty of way to be cautious with the investment yet provide opportunity for growth - there are many capital preservation funds (often investment trusts).   you should profile the money so some might be available in 5 years (low risk, premium bonds, ....) and others in the 5-10 where it is sensible to have more varied assets

I totally hear you and eco miser, fortunately I have a really good relationship and they are on route for uni in a fairly comfortable way. This money is for growth....personal and financial. Should I hear that there is a dream or viable plan then that can be addressed. My uncle travelled the world and an audiologist. Experience, living and financial security was everything yo him. If they choose to keep to that pattern with his money. I will be proud. I am desperate for them to know how much he loved and believed in them. 

theoretica

Of the people I know who had control of inherited money at 18 all used it well - there was a small city car, justifiably professional standard musical instrument, and several house deposits - and a trampoline. 

If one of your children wanted money for something it feels very wrong to me to give them what is already their own money without telling them that - would you say it was from you?  They need good information to make good decisions.

Invest987

sweetsand said:

Good and informative thread.

Don't forget that if rented out, there may be CGT. Location is the key and if it is a good one then keep it. Selling and investing, look what Covid did to the stock market.
Rental routes via good letting agent is worth the cost and take out rental income insurance but more importantly legal insurance just in case you meet morons who don't pay any rent, sublet then trash your property and by the time you get them out they have easily cost you 20k - but go via the route I said and in even a worse case scenario you will be protected to a larger extent but as anything there is a risk - property vet the renters, have no no pets, no smokers, no one on benefits or even self employed people - just decent hard working people with a good track record of savings and honest work.

ATB

Super advice. This property has to be sold now as it will take too much money to make it rentable. I will note all you said. Thank you. 

Invest987

theoretica said:

Of the people I know who had control of inherited money at 18 all used it well - there was a small city car, justifiably professional standard musical instrument, and several house deposits - and a trampoline. 

If one of your children wanted money for something it feels very wrong to me to give them what is already their own money without telling them that - would you say it was from you?  They need good information to make good decisions.

Not not at all, I am desperate to let them know who kind and generous thier uncle has been. Maybe once they hit 20 & 21 for the full info. Neither of them show desire for much at this age. They enjoy a varied life and we chat alot about lifes oportunities. Thank you for widening my views on it. Its all so new....and painful. 

cloud_dog

I am still struggling to reconcile your references to age 20 or 21 and your legal responsibility?  Are you choosing to ignore this?  (Apologies if you've explained this but I not seen anything confirming yet, although you've said you will respond to Xylophone's post when you've had a chance to digest).

Invest987

cloud_dog said:

I am still struggling to reconcile your references to age 20 or 21 and your legal responsibility?  Are you choosing to ignore this?  (Apologies if you've explained this but I not seen anything confirming yet, although you've said you will respond to Xylophone's post when you've had a chance to digest).

Yes sorry completely my fault. I tried to keep my inital questions devoid of emotion. My uncle only passed away in April aged 96 and I looked after him for 12 years including his wife for the last year of her life who had dementia. 
There is no set age really that the children would be told. They are not in need of anything and our own financial situation is not stopping them from University. However once I confirm that it is indeed a descretionary will which I now believe it is, we can keep a close eye on the childrens paths and journeys to see how this money may help prior to then being 25. Regardless of this money they already have a good grounding in financial responsibilty and I hope will have a healthy respect for this generous gift. They knew what he was about, his life, advice he gave them. So rather than precise 20 or 21 which is average I would say for life changes it will be an ongoing monitoring of projects that he may have wanted to contribute to regardless of age.  As I said his key word was growth, personally and financially. Then if course it is theres at 25.  I am so grateful to this group. All this was in my head only and getting too much.